Carriers routinely resist efforts to compel production of the underwriting and claims files on other policyholders on the basis of relevance. Early last month in H.J. Heinz Co. v. Starr Surplus Lines Ins. Co., 2015 WL 5781295, 2015 U.S. Dist. LEXIS 138080, (W.D.Pa., Oct. 1, 2015), an insurer lost that fight when a federal court in Pennsylvania required it to produce the files. The case is noteworthy, but arguably limited in terms of its application to other disputes. A Phase One trial was directed solely to the insurer’s efforts to rescind the policy because of material misrepresentations in the application, and discovery addressing whether the insured was being treated the same way as other similarly-situated policyholders was uniquely important given…
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Pennsylvania Court Orders Production of Underwriting Files On Similar Claims By Other Policyholders
Posted in Contamination, Contamination and Product Recall, Discovery, Rescission
California Court Adopts Expansive Reading of Contamination and Product Recall Coverage
Two weeks ago in Foster Poultry Farms, Inc. v. Certain Underwriters at Lloyd’s, London, 2015 U.S. Dist. LEXIS 138609, 2015 WL 5920289 (E.D.Cal., Oct. 9, 2015), a California Court applying New York law found coverage under a product contamination insurance policy for a loss of poultry caused by salmonella. The Court allowed the recovery of decontamination expenses as “accidental contamination,” holding that the policyholder need only prove that there was a “reasonable probability” that consumption of its processed chicken would lead to bodily injury or sickness. In addition, the Court rejected the insurers’ arguments that the undefined term “recall” was only applicable if the loss involved the of destruction of product already in the hands of customers, and it thereby…
Posted in Ambiguity, Contamination, Contamination and Product Recall, Product Recall, Uncategorized
California Court Holds Product Contamination Insurance Does Not Cover Ingredients Contaminated by Insured’s Supplier
On February 6th, an intermediate level California appellate court held that a product contamination policy only covered contamination that occurs during or after manufacturing operations by the insured, meaning that there was no coverage where the policyholder’s product was found to be adulterated because it used an ingredient that had been contaminated by a third-party supplier. The decision is Windsor Food Quality Co. v. Underwriters of Lloyds of London, 2015 WL 901867, 2015 Cal. App. LEXIS 195 (Cal.App., Feb. 6, 2015). One of the three panel members filed a lengthy and convincing dissent that is arguably a more correct interpretation of the language at issue. The policyholder was Windsor Food Quality Company, a frozen food manufacturer. Windsor’s ground beef supplier…
California: Service of Suit Endorsement Trumps Forum Selection Clause in Case Involving Product Recall Due to Contamination.
On February 5th in a case involving the recall of over $500,000 worth of oyster products made from Korean shellfish, the Southern District of California held: (1) that the policy’s service of suit clause, which gave the insured the choice of forum, trumped a forum selection clause that provided for suit in a New York state court; (2) that California law, as opposed to New York law, applied, and (3) that for purposes of a 12(b)(6) motion, plaintiff’s complaint, which alleged potential contamination, was sufficient to state a claim. The decision is Tri-Union Seafoods, LLC v. Starr Surplus Lines Ins. Co., 2015 WL 728477, 2015 U.S. Dist. LEXIS 23441 (S.D.Cal., Feb. 5, 2015). The case arose after Tri-Union Seafoods initiated a…
Posted in Bad Faith, Contamination, Contamination and Product Recall
